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Gasoline Prices Grow Day by Day
August 20, There will be no sharp rise in gasoline prices. Moreover, prices will remain the same until September 1, 2004, promised Vice President of Moscow Fuel Association, member of the board of the Russian Fuel Union, Aleksander Nebolkhin. But what happens after?
According to Executive Director of Russian Fuel Union Grigory Sergeyenko, the government has just one mechanism to regulate domestic oil prices - that is changing export duties. Economics Minister German Gref stated recently that starting September 9 export duties would be increased (at the moment, they make 65% of crude oil duty). “Within existing system of oil production and refining it is impossible to build free market,” – Sergeyenko believes. He finds that rise in gasoline prices will add 3% to the inflation.
Sergeyenko said there were two factors, influencing the price. For one thing, it is the government’s economic policy, aimed to increase oil production and exports with good state of external markets in the background. For another thing, it is oil infrastructure built yet in the Soviet times. Oil refineries (NPZ) cannot compete against each other due to high transport constituent, Sergeyenko explained. Moreover, independent oil refineries and plants belonging to vertically integrated oil companies cannot compete either – the first are forced to buy oil at market price, while the second get it at intracorporate prices.
Nebolkhin believes that theoretically free oil market could be created if one organized oil exchanges at the territory of Russia. “It would be optimal to have 3 trade sites: in Siberia, Ural and Volga region and 1 in the south of Russia,” he said. Comparing gasoline prices in Russia and the USA, the expert said that for 6 years gasoline prices in the countries have been pretty much the same: 35-50 cents per liter. However, since early 2004, Russia’s wholesale prices grew by 27-30%, retail – by 19-20%.
Today, Minister of Economic Development and Trade German Gref has sadly admitted that the Russian government is trying to slow down the rise in prices, but there is not certainty the measures will help.
Meanwhile, during the summer, Ai-95 gasoline grew 4 rubles more expensive (11-15 rubles per liter). Experts predict it will cost 17-18 rubles by end of the year.
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